Possible State Education Aid Cuts Could Overwhelm Proposed Pension, Health Savings

An ugly financial picture faces the Racine Unified School District if the administration’s projections are accurate.

The Board of Education on Monday will review a possible 2011-12 budget scenario that includes an $8 million deficit because potential savings from reduced district contributions to employee pension and health insurance costs won’t overcome a projected $10.5 million cut in general state aid.

The School Board meeting starts at 6:30 p.m. at the Administrative Service Center, 2220 Northwestern Ave.

David Hazen, RUSD chief financial officer, said this latest budget scenario reflects a $500 per student cut in state aid for its approximately 21,000 students. RUSD currently receives about $139 million in general state aid.

The RUSD projection doesn’t include the outcome of the April 5 referendum that asks voters for $35 million in additional spending on district operations beginning in 2011-12 and running through 2017-18.

The Wisconsin Association of School Boards last week warned its members that Gov. Scott Walker is expected to ask for $900 million state aid to local school districts in his proposed 2011-13 state budget. That works out to about $500 per student.

The governor’s office has not confirmed that figure.

The Walker administration has offered legislation that would eliminate all collective bargaining rights, except salary, for most public employees. The bill would also require employees to pay half the costs of their pensions, which are generally 5.8 percent of pay. The governor’s office has indicated that by having to no longer negotiate with labor unions on benefits like health insurance, the school district could save money by requiring employees to contribute more to their insurance premiums.

Hazen said that RUSD’s annual savings would be about $7 million in pension contributions and $5 million if all employees currently participating in the district’s health plan paid 12.6 percent of their health insurance premiums, as proposed by the governor.

Currently, district employees pay an average of 2 percent of their health insurance premiums and make no contribution toward their state pensions, he said.

However, the district still faces a budget shortfall for 2011-12.

Last week, Hazen shared a projection with the School Board’s audit committee that showed a $4.87 million general fund deficit. That scenario was based on a $200 increase in per-pupil general state aid and using about $4.5 million in federal job education funds to help pay teacher salaries in 2011-12.

The state school aid formula picture remains hazy. A highly controversial bill to plug a $137 million hole in the state budget—that includes the employee pension fund contributions and eliminating most public employee collective bargaining rights—is stalled in the Legislature. Gov. Walker has delayed unveiling his proposed state budget, including school funding plans, until March 1.